Issue of Shares at Premium and Discount – Practical Problems With Answers

True Tamplin

Written by True Tamplin, BSc, CEPF®
Updated on August 22, 2021

Problem No. 1

Asian Ltd. issued 5,000 Preference Share of $10 each at a premium of $4 per share, payable $1 per share on application; $6 per share on allotment including premium; 3 per share on first call and $4 per share on final call. The shares were all subscribed and money was duly received.
Give the journal and Cash Book entries and Balance Sheet.


Journal Entries


Cash Book


Balance Sheet


Problem No. 2

An existing Company offered 20,000 Equity Shares of $10 each at a discount of 5%. The shares were payable as under:

On Application $3 per share
On Allotment $4 per share
On FirstFinal Call $2.50 per share

Public applied for 16,000 shares and shares have been allotted. All the money was received. Pass entries in the journal and Cash Book and show the Balance Sheet.


Journal Entries


Cash Book


Balance Sheet


True Tamplin, BSc, CEPF®

About the Author
True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True contributes to his own finance dictionary, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, his interview on CBS, or check out his speaker profile on the CFA Institute website.

Leave a Comment